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Warren Buffett on President Trump and New Market Highs

Credit: Fool Editorial Photos

Warren Buffett is widely regarded as the best investor of our generation.

As the chairman of the American conglomerate Berkshire Hathaway, Buffett has produced a compounded annual gain of 19% in the company’s book value between 1965 and 2016. Shareholders who stuck with Buffett’s company through that period would have turned every dollar invested into almost two million dollars.

Investors who are looking to learn a thing or two from Buffett are in luck. Recently, the Oracle of Omaha shared his views on a number of topics during an interview with CNBC.

1. On how the new US president, Donald Trump, has not changed the way he invests head here

2. On Dow 20,000 and new market highs 

The US-based Dow Jones Industrial Index breached the 20,000 mark for the first time in January this year. The index continued to gallop ahead and went past the 21,000 mark on the first day of March.

But with markets moving higher, some investors may start to worry that a market downturn is just around the corner. Buffett shares his thoughts on the matter:

“Well, I don’t have the faintest idea what the stock market’s going to do tomorrow or next week or next month or even next year.”

The Oracle of Omaha does not spend a lot of time predicting when the market would fall. Instead, he is focused on the long-term potential of the stock market. He said:

“I do know that over time – and we’ll talk ten years or something of the sort – that equities will do better than bonds, which is the main alternative or bank deposits or whatever it may be. Fixed dollar investments for people.”

For the people waiting on the sidelines, Buffett said:

“And they’re not going to be able to pick the time to come in. I don’t know how to pick the time to come in.”

In fact, Buffett said that he has invested US$20 billion since the November US elections. It is not because he thinks that the market is going to continue to go up over the short term. Instead, he is focused on the companies that he thinks will increase in value a decade or more down the road through solid business growth.

Foolish takeaway

The stock market may breach new heights and new presidents may come on the scene. But, the stock market will chug along over the long term.

The SPDR STI ETF (SGX: ES3), a proxy for Singapore’s stock market barometer, the Straits Times Index (SGX: ^STI), has delivered total annual returns of around 7% from its inception in 11 April 2002 up to the end of January 2017. Along the way, the US has had different presidents and the global economy and stock market have taken their fair share of hits (some examples include the period of the Great Financial Crisis and the Eurozone debt crisis).

In other words, businesses continue to move along. As for Buffett, he continues to invest.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Berkshire Hathaway.